Frazzled and trying to do at the 11th hour of their annual session what they should've done weeks ago, Idaho state lawmakers Thursday rejected tax "reform" legislation that was far from reform. It amounted to swapping one bad law for another.
This is one of those good news-bad news developments—good news that badly crafted legislation is dead, but bad news that Idaho homeowners apparently won't be enjoying property tax relief as promised.
As sort of a way out, the Senate passed a bill for a public vote in November. The ballot question would ask whether taxpayers would be willing to pay a higher sales tax to be relieved of some property taxes.
Straws were in the wind days ago that tax legislation was widely unacceptable. Business lobbyists opposed it because they believed higher taxes were in store for their clients. Educators fought it. Even senior Republicans looked askance at the bill as not achieving a worthwhile end.
Boiled down to its most worrisome elements, senators who killed the bill were concerned the "reform" would boomerang.
By ending property taxes to support public school maintenance and operations and rely instead on a sales tax increased from 5 percent to 6.25 percent, critics suggested public schools might suffer in an economic downturn when sales tax revenues shrink. And it's worth noting, the Idaho Legislature has a regrettably sorry record on bailing out public schools during time of need.
Increased sales taxes also would hit middle- and lower-income families the hardest on purchases of household essentials.
Under the best circumstances, crafting tax legislation is difficult and time consuming. Lawmakers should by now have found their last-minute rush to cobble together an unpopular and unsupportable bill an embarrassment, since property tax reform had been advertised far and wide as a priority goal of the 2006 session.
Now, with the better part of this year available for study, legislative finance and tax committees should devote their time to a plan that is saleable and fair and doesn't err again by tying property tax relief and jiggered sales tax rates together.
Time to reconsider their past resistance to closing a few loopholes may also lead a majority to finally see the justice of activating taxes, such as a real estate transfer tax, that would painlessly remedy so much of state and county revenue issues.
It's worth noting that by session's end a few beneficial homeowners' tax bills will emerge—a new exemption raised from $50,000 to $75,000 and a "circuit breaker" clause allowing low-income homeowners to apply for tax help from the county.
